Value Added Tax

Value-added tax and artistic or creative activities or sales abroad are an important issue international artists are often faced with.

Example:An artist liable to VAT and living in Germany sells a picture to a private individual in Denmark. What country is entitled to VAT?

In this case, the so-called “Unternehmenssitzprinzip” (English: registered-place-of-business principle) applies, because the buyer is a private individual. The artist is thus required to add German VAT to his/her invoice and pay it to the German tax authorities.

It would be a different situation if the Danish buyer had acquired the picture for his/her practice, i.e. if he/she appeared as a business. Then the so-called “Empfängerortprinzip” (English: place-of-supply principle) would apply and the buyer would be required to pay the VAT to the Danish authorities.

What happens if the private individual lives outside the EU, where the exploitation of rights is concerned, or if guest performances are given? Different rules and procedures must be adhered to in each case.